Investment Rating - The report maintains a "Buy" rating for the company with a target price of $27.02 [6][22]. Core Insights - The company reported a significant revenue increase of 42% year-on-year to RMB 23.3 billion in Q1, exceeding consensus expectations by 4% [1][11]. - The growth in revenue was driven by substantial increases in the new home and renovation segments, with new home revenue rising 64% and renovation revenue increasing 22% year-on-year [1][2]. - The company anticipates that the renovation business will achieve breakeven profitability in Q2, supported by improved operational efficiency and AI tools [2][12]. Financial Performance - In Q1, the gross profit margin decreased by 4.5 percentage points to 20.7%, primarily due to a rise in fixed salary costs [1][4]. - Adjusted net profit for Q1 was RMB 1.4 billion, reflecting a slight year-on-year increase of 0.1% [1][4]. - The company expects adjusted net profits to rise to RMB 82 billion, RMB 99 billion, and RMB 119 billion for the years 2025, 2026, and 2027 respectively, driven by operational leverage and AI efficiency improvements [4][18]. Business Segments - The existing home segment saw a revenue increase of 20% year-on-year, with a gross transaction value (GTV) growth of 28% [2][11]. - The new home segment outperformed expectations with a GTV increase of 53%, while the renovation segment's GTV also showed strong growth [2][11]. - The company is leveraging AI technology to enhance efficiency across its operations, with significant improvements in transaction conversion rates reported [3][13]. Market Position - The company continues to outperform the broader real estate market, with its GTV growth of 34% in Q1 compared to the national average of 16% for existing homes [11][12]. - The report highlights the company's expanding market share in the existing home sector, supported by improved agent productivity and AI-driven tools [3][11]. Valuation - The target price of $27.02 corresponds to a 27x price-to-earnings (PE) ratio for 2025, which is above the industry average of 24.7x [4][22]. - The report indicates that the company's valuation premium is justified by its superior growth prospects compared to the overall real estate market [22][23].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $27.02 [6][22]. Core Insights - The company reported a significant revenue increase of 42% year-on-year to RMB 23.3 billion in Q1, exceeding consensus expectations by 4% [1][11]. - The growth in revenue was driven by substantial increases in the new home and rental segments, with new home revenue growing by 64% year-on-year [1][2]. - The company is expected to achieve breakeven in its home renovation business in Q2, supported by improved operational efficiency and AI tools [2][12]. Revenue and Profitability - The revenue breakdown shows that existing home, new home, home renovation, and rental revenues grew by 20%, 64%, 22%, and 64% year-on-year, respectively [1][2]. - The adjusted net profit for Q1 was RMB 1.4 billion, a slight increase of 0.1% year-on-year, despite a decline in gross margin to 20.7% [1][4]. - The company anticipates continued improvement in net profit margins as agent efficiency and cost ratios optimize [1][3]. Business Segments Performance - The existing home segment's gross transaction value (GTV) increased by 28% year-on-year, outperforming the national average growth of 16% [2][11]. - The new home segment's GTV grew by 53% year-on-year, significantly higher than the national new home sales, which remained flat [2][11]. - The home renovation segment is expected to achieve profitability in Q2, with a notable increase in order volume and efficiency [12][14]. AI and Operational Efficiency - The implementation of AI tools has led to significant improvements in agent productivity, with transaction rates increasing by over 30% [3][13]. - AI capabilities are being integrated across various business functions, enhancing operational efficiency and customer satisfaction [13][14]. - The company is focusing on leveraging AI to streamline processes in home renovation and real estate transactions, which is expected to drive future growth [14][16]. Financial Forecasts - Revenue forecasts for 2025-2027 have been adjusted upwards by 4.5%, 4%, and 0.6%, respectively, reflecting anticipated efficiency improvements and market growth [4][18]. - The adjusted net profit estimates for 2025, 2026, and 2027 are projected at RMB 82 billion, RMB 99 billion, and RMB 119 billion, respectively [4][18]. - The target price of $27.02 corresponds to a 27x PE ratio for 2025, indicating a premium valuation compared to peers [22][23].